The Weekend Bulletin (Vol. 1 | Iss. 29)
A digest of some interesting reading material from around the world-wide-web. Your weekly dose of multi-disciplinary reading.
Volume 1 | Issue 29 | June 06, 2020
Section 1: Investing Wisdom
Three investor interviews that I enjoyed this week:
"We’ve only owned 123 companies in 31 years and that includes the 21 we own today. The compounding is really what drive the returns. You align yourself with 20 or 25 great companies that can compound for not just years but decades oftentimes and they do the hard work for you." This is a great conversation between Dan Davidowitz & Jeff Mueller of Polen Capital and Tanos Santo of Columbia Business School on their investment philosophy and approach.
"In most walks of life, if you are correct you succeed. But in investing, it's not enough to be correct. If your correct answer is a consensus answer, then it's already in the price. Not only do you need to be correct, but also against consensus in order to make money." Rupal Bhansali, CIO & Portfolio Manager at Ariel Investments (named “Global Guru” by Forbes International Investment Report, “Global Contrarian” by Barron’s, “unconventional thinker” by PBS’s Consuelo Mack, member Barron’s Investment Roundtable which showcases “10 of Wall Street’s smartest investors”), talks about the difference between convential investing and non-consensus investing in this interview with veteran investor Ramesh Damani.
"Keeping with this Peter Lynch theme, I have a working theory that any brand someone chooses to display proudly on their chest is probably owned by a good company." Known as Bluegrass Capital on Twitter, this individual investor talks about his journey into the world of investing and shares his investment philosophy.
"The Equity Yield Curve, a phrase of our choosing, is one tool – and one of the most powerful – for identifying and visualizing the enormous level of return often available from securities that have been ‘discarded’ or ignored by conventional investment practices. It is all about a rather insubstantial thing: time or, more accurately, time risk." This article talks about our inability to understand the convexity of the future - a concept similar to 'hyperbolic discounting' that we saw in Issue 12. In simpler words, why we underestimate the future earnings of companies.
Bonus reads for subscribers: Last week, this bulletin hit it's first century of direct subscribers (there around a similar number of whatsapp readers). As a gesture of thank you, the following is a subscriber only share:
Section 2: Mental Models & Behavioral Biases
India seemed to be unique in its response to the current pandemic. We decided to lockdown the entire country while the number of cases were very low. Despite this stringent measure, the number of cases have risen sharply over the last two months, leading to questions being raised on the need for the lockdown at the cost of the economy. We often view the past from our own lenses, forgetting that it's important to understand the time and the system prevailing at the time the decision was made rather than analyze the decision in isolation. Using fence as an example, the writer G.K. Chesterton explains the importance of 'second order thinking' and therein lies our mental model of the week.
Section 3: Lessons From History
These are testing times. With so much going on around the world, there can be a lot of anxiety - about life, beliefs, equality, finances, investments, resuming work etc. It is in times like these that people look up to leaders for encouragement, support, and direction. But how do leaders do that? And what about their own anxiety? Here are some helpful lessons from some of history's greatest leaders.
Section 4: Personal Development
We've looked at some of the benefits of working away from office in the past. These benefits, however, have been more individualistic. Here is one that is more populist: Working alone can improve your teams problem solving capabilities. To be sure, the article doesn't suggest a complete isolation from work, but talks about some strategies that can be adopted to improve problem solving abilities of teams.
Section 5: Some Thoughts...
I usually end the bulletin with some trivia, but this time I have chosen to add some recent events that i couldn't stop thinking about.
A few things happened around the world recently, some historic and some disturbing.
On one hand, we saw the triumph of human endeavors...
...while on the other, we put ourselves to shame.
Note: clicking on images will reveal their source
These are really tough times for everyone, but we need to remind ourselves that 'being human is given, but keeping our humanity is a choice'. In the words of the great Buddha 'Be kind to all creatures. This is the true religion'.
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With heartfelt thanks,
- Tejas Gutka.